Traditional retail banking institutions are facing a major perception gap between the expectations of consumers and the perceived performance of their brand. This is the central finding of a new report from customer engagement specialist Braze. 

Similar concerns have been flagged up by consulting firm Capgemini which found that retail banks are currently lagging in their ability to offer true omnichannel experiences, with many customers pivoting to digital competitors that offer services that are more personalised and immediately gratifying than those to be found on the high street. Some 75% have had their digital banking expectations raised after experiencing cost-effective and seamless services from disruptors, with old school players struggling to deliver something similar. 

Around 70% of banking executives are concerned that the problem lies partly in having insufficient data analysis capabilities, says Capgemini. That’s despite banks, and other institutions like building societies and credit unions, having spent years, and much of their IT spend, on digital transformation projects to enable things just like this. 

Constant flux and change have got in the way of attempts to digitise the customer experience, and the shifting sands of regulation haven’t helped. Open Banking Phase 2 has added to the mix of stress points. Large ecosystems of partner organisations need to be folded into any CX initiatives. And as time ticks on, there is more consumer demand than ever for digital benefits. 

There has been a parallel focus by banks on cloud migration as the whole infrastructure basis that institutions are founded on shifts. Many are struggling to see clear dividends from this just as much as they are from digital engagement projects. A lot of effort and investment has gone into making cloud the catalyst for digital change. Cloud was everybody’s tick box, but now there are doubts in some areas about whether that business case stacks up. Wherever banks look, pressures are mounting.

Seeking unity

Many banks do at least now have an in-house proprietary or vendor supplied digital banking application, and perhaps other digital endpoint channels in the form of ATMs or kiosks. But an effective layer of middleware, centred on digital engagement and uniting all data and services, probably remains frustratingly a work in progress. What they have instead is all too often best described as a mess of digital spaghetti. 

The challenge, as ever, is all about data. Every bank’s aim and objective is to have a functioning digital engagement layer whereby any relevant data is instantly available to a digital banking application. A digital banking app, at the end of the day, is only as good as the data you can pull into it. You can have all the fancy APIs you want, but if the customer can’t action the right decision at the right time, not much has been achieved. 

What banks need now is a data virtualisation platform that pulls in data no matter which warehouse, silo or database it lives in. This needs to happen regardless of how inconsistent or unstructured that data is, even if it is on legacy systems that make it hard to access. Where once you would need to move the data to a central repository, now via API you can simply access its value where it is. A history of complex M&A moves mean that key information often resides across a hodgepodge of different entities. This makes ensuring that customers get a single view across several products in one mobile banking application a big challenge - even bigger when you factor in an ecosystem of partners. 

The best data virtualisation solution will offer a great way of pulling data from any location, without having to physically move it from warehouse to warehouse. It would ensure that the data goes via an abstraction layer to a digital engagement layer where it is exposed to a mobile banking app or other digital tool. The result is that data is more manageable and therefore useful. 

KBTG, a subsidiary of K Bank, provides 16 million retail banking customers with flexible and agile services. To become the digital bank of the future, KBTG needed a much faster way to provide data to internal teams for enabling mobile banking apps. Today, KBTG sees up to 10 million transactions a day, with some being ad hoc requests such as a customer wanting to see their most recent activity on the mobile app. Data virtualisation software is providing the stability for higher performance apps, better maintenance and support, and flexibility.

If banks are feeling that the whole digital transformation and digital engagement game is proving intractable, then perhaps they should take not a wholesale approach but be driven by one use case at a time. Go small with a trusted partner knowing that you can go big later. This way they gain scale, velocity, governance, important given the predicted rise of embedded payments and the knock-on need for better speed and security. Banks need a partner that has experience of all the complexity they are facing, one that offers a platform that has been proven to scale, particularly in hybrid environments. They must show a track record of working in the financial services industry and across a variety of environments. 

The good news is that the technology to fix all these challenges is there, and it continues to evolve in the right direction. Standards are coming through concerning how data is exchanged and how it is held and managed in the cloud. Despite a sea of worries, the future still looks pretty good.